Oct 26 Homeowners Deserve Better Protection from Sloppy Foreclosures

The numbers are staggering: Last year there were 2.8 million foreclosures, a 21 percent increase over 2008 and a 120 percent rise compared to 2007,” according to Realtytrac, a website that specializes in foreclosures. Four states accounted for half of all foreclosures: California, Florida, Arizona, and Illinois.

Probably the most disconcerting thing about the federal government’s actions recently is their ho-hum response to the biggest lenders in the country – Bank of America, JP Morgan, and others – voluntarily stopping foreclosures due to “inaccurate paperwork.” Meanwhile, all 50 state attorneys general have started investigations. I’m not suggesting the Department of Justice get involved just yet. Instead, Obama should use it as leverage to ensure lenders are truly investing effort into the modification process and are giving homeowners due process protection when after the foreclosure process has been started. Homeowners deserve that much.

What exactly is exacerbating the foreclosure problem? In some cases it is because they are securitizing mortgages (i.e., pooling them together and selling them to investors) too fast or too often to maintain proper due diligence. In other cases, it is because banks are not the mortgage owner, someone else is -- at least on paper.